Jane Street Global Trading based in the United States (US) has filed a lawsuit against the London Metal Exchange (LME) for US$ 15.3 million. The lawsuit is related to LME's decision to cancel nickel trading last March.
This is the second lawsuit the LME has received this week. Previously, hedge fund Elliott Associates also sued LME for US $ 456 million for a similar matter.
The LME which is owned by the Hong Kong Exchange and Clearing House is being investigated by regulators after halting activity and canceling nickel trading on March 8. The halts and cancellations were made because of the nil volatility that sent prices doubling to more than US$100,000 per tonne within a few hours.
"The decision to cancel nickel trading during a period of high volatility severely undermines market integrity and sets a dangerous precedent that calls into question future contracts," a Jane Street representative said.
Elliott's spokesman said in an email that LME had acted "unreasonably and irrationally" in particular taking into account irrelevant factors, including its own financial position.
The LME, the world's largest and oldest market for the metal commodity industry, said it must take action to protect the overall market when trading becomes erratic.
In a statement, the exchange said it had an important role to play in ensuring fair and orderly markets for all those wishing to participate.
Accordingly, the LME considers claims by quantitative funds and US market makers to be unfounded and the LME will vigorously oppose them.
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